Business this week

The Spanish government announced another clean-up of its banking system, including plans for a “bad bank” to house dud property loans. It will also provide a €4.5 billion ($5.6 billion) bridging loan, in the form of government bonds, to Bankia, a particularly troubled lender. See article

The French finance ministry scrambled to rescue Crédit Immobilier de France, a small bank specialising in supplying credit to lower-income households. The ministry said it would underwrite an immediate €5 billion ($6.3 billion) of funding so that the lender could continue operating, though that figure could rise.

Finland’s economy shrank by 1.1% in the second quarter. The country had been one of the euro zone’s best performers, but the crisis is now starting to take its toll on exports, which account for 40% of Finnish GDP. In July the finance minister said Finland would “not hang itself to the euro at any cost”. Some wonder if a “Fixit” (a Finnish exit from the euro) is more likely than a Grexit.

Nokia unveiled its first smartphones that run on Microsoft Windows. The devices are central to the Finnish company’s struggle to survive in the smartphone market, but it didn’t announce pricing details or say when the new models will be available to buy. Its share price fell sharply. Samsung and Motorola also exhibited new devices. Apple is expected to launch the iPhone 5 on September 12th.

Facebook’s stock fell below $18 a share for the first time, after Morgan Stanley and JPMorgan Chase, the two biggest underwriters of the social network’s IPO last May, slashed their targets of how high they think the share price will be by the end of 2013, to $32 and $30 respectively. Facebook floated on the market at $38 a share. The company took a number of steps to shore up its stock. Mark Zuckerberg, Facebook’s boss, said he would not sell any of his large stake for at least a year.

A purchasing-managers’ index compiled by HSBC suggested that manufacturing output in China had shrunk in August at its fastest pace since the worst of the financial crisis in March 2009. Other indices from America, India, South Korea and Taiwan confirmed that their manufacturers are also struggling to cope with weaker global demand.

Emirates Airline, based in Dubai, and Australia’s Qantas Airways announced an alliance. The pair will co-ordinate flight schedules and Qantas is to move its long-haul hub in Asia to Dubai from Singapore. The decision marks a departure for Emirates from its long-standing resistance to forging closer ties with airlines, which may have been prompted by the rise of Abu Dhabi’s Etihad Airways.

Lufthansa cancelled hundreds of flights because of a strike by cabin crew over pay and conditions. The threat of staff action has been hanging over the German airline’s operations all year.

The unemployment rate for people aged under 25 in the euro area stood at 22.6% in July. In Spain it rose to 52.9%. The International Labour Organisation, meanwhile, warned that the situation was worsening for young jobseekers in some regions of the world and that “youth labour markets will now take longer to revert to levels seen prior to the global financial crisis.”

Upping the pressure

America’s Department of Justice filed strongly worded court papers in a civil case that will examine the extent of BP’s responsibility for the 2010 oil-spill disaster in the Gulf of Mexico. In the documents the department expounded its view that the explosion at the rig that led to the spill is an example of “gross negligence”, which if proved in court could leave BP facing a fine of up to $21 billion. The energy company denies the claim and said it would present evidence to the contrary at the trial, which starts in January.

A big legal fight between two Russian oligarchs came to a conclusion in London. Boris Berezovsky, who made a fortune from the privatisation in the 1990s of Sibneft, a Russian oil firm, had claimed that Roman Abramovich, his one-time partner, who is now the owner of Chelsea football club, had forced him to sell his stake in the firm at an unfairly low price after the two fell out. But the judge dismissed Mr Berezovsky’s claims, saying they were “exaggerated and at times, incredible”. See article

No meat, please

McDonald’s said it would open its first-ever outlets with vegetarian-only options in India next year. The fast-food chain has been dishing up fish burgers and Chicken McNuggets in the country since 1996, but it is building two diners near pilgrimage sites (Amritsar for Sikhs and Katra for Hindus) that will instead serve McAloo Tikki burgers (made from potato patties) and Pizza McPuffs (a vegetable pastry).